Colombia to auction 200 oil exploration blocks
* Colombia agency says 50-100 blocks could be awarded
* Oil, mining investment seen at $62 bln from 2008-15
* Expects most interest in Llanos and Putumayo areas
By Jack Kimball
BOGOTA, June 21 (Reuters) - Colombia will auction more than 200 oil blocks on Tuesday that could double crude reserves and draw hundreds of millions of dollars of investment into Latin America's No. 4 oil producer, officials and analysts said on Monday.
Oil executives from around 80 local and foreign companies will meet in the coastal city of Cartagena to bid on exploration and production blocks across the country and offshore. Some 70 licenses have been granted since 2004.
Investment in the Andean nation's oil and mining sectors has nearly quintupled since President Alvaro Uribe took power in 2002, driving leftist rebels out of resource-rich areas and attracting greenbacks with pro-investment policies.
"Colombia has some of the most attractive fiscal terms that are out there," said Frederick Kozak, energy analyst with Canaccord Genuity. "You can't compare it to North America, but if you look at other countries it feels a lot like a North American type of business environment."
Uribe's U.S.-backed offensive against guerrillas opened up new areas of the nation, and the victory of Former Defense Minister Juan Manuel Santos in Sunday's election is seen as an endorsement of Uribe's popular policies. [ID:nN20126923]
Colombia said it expected oil and mining investment of $62 billion from 2008 to 2015. That is up 24 percent from the previous estimate of $50 billion. [ID:nN21242394]
Colombia's goal is to add 4 billion barrels of oil reserves over the next 10 years, but officials say the country may be able to add as much as 6 billion barrels to reserves if exploration holds steady and state-run Ecopetrol ECO.CN boosts recovery rates. [ID:nN03183757]
It recently certified about 3.1 billion barrels in proven, probable and possible reserves, double its previous estimate. [ID:nN03227295]
Bogota will auction off three types of blocks -- one in already explored and producing areas, a second set in newly prospective basins and the third in largely unexplored areas.
Most of the energy companies are bidding for more than 130 blocks in Type One, or already explored areas, with a total of 6 million hectares (14.8 million acres). The basic contract will be for a period of six years with a possibility to extend, the government says.
National Hydrocarbons Agency Director Armando Zamora told Reuters he expected the country to award 50-100 blocks with an average investment of $10 million during the first three years.
"Based on recent exploration results, Putumayo and Llanos are probably showing the best potential and those are probably the two areas where there is more interest," he said. His agency estimates the potential of the Caguan-Putumayo Basin at 255 million to 2.2 billion barrels, while the Eastern Llanos Basin could be between 4.5 billion and 41.2 billion barrels.
The royalty system -- which includes payments based on output levels, crude oil prices and a voluntary additional royalty -- will remain the same, he said.
Zamora said the primary criteria for awarding Type 1 blocks would be exploration investment, with the amount of a voluntary royalty used in the case of any tie between bidders.
Companies must have a voluntary royalty of at least 1 percent, he said. The Energy Ministry may require contractors to deliver up to 50 percent of output to the domestic market.
Colombia's average oil production rose 14 percent in 2009 to 671,000 barrels per day (bpd) compared with year before, and the nation has produced an average of 764,000 bpd in 2010, according to the agency. (Editing by David Gregorio)
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